Tokenization vs Encryption

  • March 13, 2018
  • News

Tokenization vs Encryption

Although the internet has been beneficial in the way and manner data and classified document are being transmitted, the risk posed by cybercriminals in intercepting such data cannot be overemphasized.  Luckily, the cyber communities still have valid options –to choose from- when information is needed to be transmitted securely.  Tokenization and encryption have remained the most potent option through which data and vital documents can be stored or transmitted without the fear of hijack by cybercriminals. In fact, these two medium do not only satisfies the regulatory requirements of  PCI DSS, HIPAA-HITECH, GLBA, ITAR, and the EU GDPR; but ensures that the organization has data security that is in line with the globally best practice. However, tokenization and encryption technology are not the same even though they both help in securing data over the internet and at rest. They have distinctive ways of application and usage, which makes each technology a viable preferable data securing option under a particular circumstance. Encryption and tokenization are both used in securing end-to-end process a typical example would be,  securing electronic payment‘s data.

To paint a clearer picture of the significant distinction between encryption and tokenization, the subsequent paragraph dwells mainly of the technology used by both.


Encryption Tokenization
Plain text is mathematically transformed into cipher text utilizing  an encryption algorithm and key It uses a database where a map of randomly generated token value for plain text is stored
The small encryption key is all needed to decrypt data that can be scaled to large data volumes The ever-increasing size of the database makes secured scaling and performance maintenance  very difficult
Its applicable for use in processing both for structured data fields and unstructured data efficiently Relevant in processing  structured data fields such as Social Security numbers or payment card
The best option when exchanging classified or sensitive data with third parties who have the encryption key It’s difficult to  exchange data with third parties since it requires direct access to a token vault where mapping is done
encryption schemes that preserve Format often tradeoff the lower strength Maintaining format has no diminishing effect on the security strength.
Original data are dispatched from the   organization in an encrypted form The Original data remains in the organization as expected by some compliance policies


Encryption is the process whereby readable information in plain text is converted into a non-readable form called ciphertext through the use of an algorithm. To further decrypt the information into the original plain text format, an encryption key and an algorithm are required. SSL encryption has been a common and efficient method implored by individuals and cooperate bodies in protecting vital information shared over the Internet.

There are a lot of encryption tools readily available for use often on PCs, and third parties software, but ultimate care is required when using a third party software for any encryption. Encryption helps in securing stored data in case an accidental loss of vital data when your computer is attacked by virus or crashed. It further keeps your data in stealth mode from the government or cybercriminals prying eyes.

Furthermore, symmetric key and asymmetric key encryption are the two major types of encryption. As the name implies, symmetric key encryption uses one key to encrypt and decrypt the information at any point in time. Symmetric key encryption has its disadvantage, which is an uncontrollable access a compromised key it grants to an invader at both ends (to encrypt or decrypt data). It enables the invader to easily decrypt and unlock all the data secured. The venerability of the symmetric key method led to the development of a more secure encryption method called the asymmetric key encryption which allows multiple parties to exchange encrypted data with the different encryption key.

However, asymmetric key encryption uses two different keys for the encryption and decryption processes; this is also called public-key encryption. In this instance, the key used to lock the data can be freely distributed since it cannot unlock it. It is a common practice with the merchant to encrypt payment data with a public key before sending to a company that will process the transaction. After that, a private key to decrypt the card data for payment processing will be sent to the latter company. Asymmetric key encryption has also remained a useful tool in preventing identity theft on the internet is using SSL certificates.

As a preventive measure, the crucial periodical rotation is a common practice among users of encryption to minimize the incidence where a compromised key would be used to decrypt all encrypted data. Keys rotation helps to reduce the damage caused by a compromised key to the barest minimum.

In recent past, one of the challenges with encrypting data within applications has always been that the encryption impairs application functionality like sorting and searching. The difference in the format of ciphertext and the original data might leads to encryption breaking field validation. Interestingly, organizations can now protect their information without disrupting the end user functionality within business-critical applications with the help of format-preserving, searchable encryption schemes, and new order-preserving techniques. Although there is usually a tradeoff between application functionality and the strength of encryption.


Tokenization is the process of converting valuable data, into random characters called a token that has no meaningful value on its own. Tokens reference the original data but are not useful clues in guessing the values of the original data. Since tokens are not mathematically generated, direct is no method that can deduce the value of the original data from the tokens generated. Unlike encryption, Tokenization uses a database-token vault-, where the relationship between the sensitive value and the token is stored. In most instances, encryption is used to secure the real data in the vault.

The token value can be substituted for the real data in most applications. Whenever there is need to retrieve the real data – as it is in the case of processing a recurring credit card payment – the token is submitted to the vault, and it fetches the real value for use in the authorization process using the index. The instantaneous execution of the operation by the browser or application makes it unbelievable to the user that the data were stored in a different format on a cloud vault.

They tokens are breached, they are no method that can be used to reserve the token to the original data values. Hence this is an advantage it has. It is the most preferred method for payment card transaction since the tokens are useful even when breached.

Use cases for encryption and tokenization

Tokenization helps merchants in securing payment card data as its obligatory under PCI DSS. Encryption can also be used to secure account data, but the tokenization technology of not sharing the original in any form meets the PCI DSS requirements. The Payment Card Industry Security Standards Council (PCI SSC), -the organization responsible for enforcing PCI DSS-, outlined a set of tokenization guidelines in 20; though the guidance is yet to be included in the official PCI DSS standard, qualified PCI assessors now accept tokenization as a viable solution to meet PCI DSS requirements

Recently, tokens are being used to secure other types of sensitive identifiable information, telephone numbers including, social security numbers, account numbers and so on. The backend systems of many organizations use passport numbers, Social Security numbers, and driver’s license numbers as unique identification mean. These unique identifiers are carefully embedded into these backend systems and are almost impossible to be deleted. Tokenization is used to protect the identifier’s data as a way of maintaining the functionality of backend systems without exposing PII to cybercriminals.

Encryption, on the other hand, is used to secure structured fields like those containing PII and payment card data; it is also applicable in securing unstructured data in the form of documents and textual passages. Encryption is the best method of securing data exchanged with third parties since the other party requires only a small encryption key to gain access. SSL (Secure Sockets Layer), uses encryption to generate a secure tunnel between the end user and the website. SSL certificates rely on Asymmetric key encryption to validate identity.

Finally, both Encryption and tokenization are regularly used today to protect data stored in cloud services or applications. The need and type of data to be secured is the determinant factor to consider when choosing the method to secure any data. Most times, the nature of data may warrant the combination of the two methods to achieve the level of security needed, but most importantly, the compliance to the regulatory requirements, nature of information to be transmitted, and target recipients should be given significant consideration before making any choice.